Income and tax levels for candidates in Maine governor's race vary greatly

AUGUSTA — Annual earnings and how much they pay in taxes varies greatly among the candidates for governor.

One pays more in state property taxes than he would earn as governor. One pays property taxes in Florida but not in Maine. And one pays about $500 less in property taxes on his home and a woodlot than the statewide median, according to information the candidates provided to the Sun Journal.

Independent candidate Eliot Cutler, who campaigns on a property-tax reform plan, pays $76,000 a year in taxes on his seaside home in Cape Elizabeth. Maine pays its governor an annual salary of $70,000. Cutler also pays $6,320 in property taxes in the town of Hancock and another $6,126 in property taxes in the U.S. Virgin Islands.

Incumbent Gov. Paul LePage, a Republican, pays no property taxes in Maine but pays about $2,500 a year on property he owns in Florida, according to information released by his re-election campaign this week. That's about $800 more per year than that state's median property tax.

Second District U.S. Rep. Mike Michaud, the Democrat in the race, pays $1,215 in taxes on his home in East Millinocket and another $286 on his woodlot in Medway, for a total of $1,501.

"It’s important for voters to understand who the candidates for governor are, and that includes where they live, how they've earned a living and how tax policy affects them personally," Michaud said Thursday. "As for me, I’m looking forward to building a log cabin on my woodlot and plan to be paying property taxes there for the rest of my life."

Both property and income taxes are hot issues in this year's race for governor. As LePage touts his record of passing the largest state income tax cut in history, Michaud says that break largely benefits the state's wealthiest residents while pushing more costs onto local property taxpayers.

As for income and income taxes, Cutler and LePage both file joint returns with their spouses, while Michaud files an individual return.

For 2013, Cutler and his wife, Melanie, reported a total income of $782,957, mostly from self-employment, while paying $195,585 in federal income tax and $44,073 in state income tax.

Gov. LePage and his wife, Ann, reported a total income of  $97,525, including the governor's salary of $70,000 and the proceeds from a real estate sale. They paid $12,692 in federal income tax and $6,468 in state income tax.

Michaud reported a total income of $200,003, including his congressional salary of $174,000, the proceeds from the sale of two properties in Maine and some pension income. Michaud also reported a loss of $2,254 on rental properties he owns. He paid $35,479 in federal income tax and $11,692 in state income tax, according to data provided to the Sun Journal.

In 2012, Cutler placed his Cape Elizabeth property in a trust run by a limited liability corporation that he heads and is incorporated in Delaware.  

Cutler said the move was recommended by his legal and tax advisers and is common for properties that have multiple owners. Cutler said all of his property is owned jointly with family members, including his children, his brother and his wife.

"An LLC is a very common form of ownership when multiple owners and multiple generations of owners are involved," Cutler said in a prepared statement. "So this was the ownership structure recommended by my legal and financial advisers for management and financial planning purposes."

Cutler leases his home from the LLC but said it has no bearing on the amount of property tax he pays.

"The important point here is that I pay exactly the same amount of property taxes that I would pay if the properties were in just my name or Melanie and I as joint owners," he said.  

The arrangement is similar to one employed by former President Bill Clinton and his wife, former U.S. Secretary of State Hillary Rodham Clinton. Critics of the practice have said that while it isn't illegal, it does allow those with wealth to avoid paying taxes on their estates when they die.

Cutler has spoken out against Maine's estate tax during campaign events. In March, he told a group in Brunswick that Maine's estate tax was one of the primary things that pushes Maine's wealthiest to retire elsewhere.

“There are three factors that drive people my age away from Maine," Cutler said at the time. "One is the estate tax. That matters to wealthy people; it doesn't matter to others. But when we drive the wealthy out of Maine, we're driving away a lot of investment in this state.” 

It's a position he and LePage have in common. In his February 2014 State of the State Address, LePage proposed eliminating Maine's estate tax.

"It would encourage retirees to stay in Maine," he said.

Ben Grant, chairman of the Maine Democratic Party, said Cutler and LePage's stance on the estate tax shows they are disconnected from the average Mainer.

"Two of the candidates want to create one set of rules for the wealthy and another set of rules for everyone else," Grant said. "Mike Michaud is the only candidate who's looking out for the best interests of working Mainers and growing Maine's middle class."

However, Cutler's campaign has been on a "property tax road show" touting a proposal that would broaden the state's sales tax to lower property taxes.

Under that proposal, according to Cutler campaign spokeswoman Crystal Canney, the amount Cutler pays in property taxes would increase by $2,145.

Neither Cutler's wealth nor his legal efforts to protect it are damaging to him among voters, according to at least two political scholars in Maine.

Sandy Maisel, an author and professor of politics and government at Colby College in Waterville, said Cutler's wealth means he is not going to be "beholden to anybody."

Maisel said putting a home in an LLC is not all that "common" because it's mostly a practice employed by the "wicked rich." But it doesn't mean there's anything wrong with it.

David Sorensen, a spokesman for the Maine Republican Party, said it wasn't surprising Cutler would seek to protect his assets and blamed it on Michaud and three decades of "failed" Democratic tax policy in the state.

"Considering Maine has the sixth-highest tax burden in the country after decades of Michael Michaud and Democrats holding power in Augusta, it's not surprising that Mainers would pursue legal means to reduce the impact of those policies on their families," Sorensen said Thursday.

Maisel said Cutler's wealth does, however, accentuate both Michaud and LePage's working-class roots.

"Nobody could ever claim that Congressman Michaud or Gov. LePage are so wealthy they don't understand the working man," Maisel said. "I don't understand, or I don't even begin to understand, how Gov. LePage thinks he represents the people of the state of Maine of his income level or of his background, but it is what it is."

Canney said Cutler worked for what he has and is successful largely because his parents valued education and that created opportunities that Cutler seized upon. Canney said Cutler wants to use his skills and background to create opportunity for others.

Maisel said it is easier to see Michaud's connection to the working class, given his years as a paper mill worker. "Cutler is cut from a different cloth and it's difficult to see how he represents the average Mainer, in my estimation, and I think the average Mainer feels that way too," Maisel said.

Maisel said there may be an issue among voters with LePage not paying property taxes in Maine, but the issue isn't a new one and is one LePage was able to overcome in 2010 when he first won election.  

Maisel said not paying property taxes in Maine does suggest LePage doesn't really "live in the state of Maine."

Lizzy Reinholt, a spokesman for Michaud's campaign, said Mainers won't be impressed that the LePages only own property in Florida. It suggests LePage isn't truly vested in Maine's future, she said.

"The fact that Gov. LePage doesn't pay property taxes in Maine speaks for itself," she said. "Congressman Michaud is proud to be a Maine resident and property taxpayer. He was born here, raised here and plans to retire here."

Jim Melcher, a political science professor at the University of Maine at Farmington, said some critics are also making a point of LePage not personally feeling the impact of state reductions to its revenue-sharing program with local towns and cities, which they say have caused property taxes to shoot up.

LePage has proposed various cuts to the program in recent years, suggesting cities and towns are not doing all they can to consolidate services and share costs to bring down property taxes.

But as for LePage living only in the Blaine House, Melcher said he thinks that issue ultimately "doesn't cut that much ice with people."

He said Cutler's wealth may boost the argument that he's not like the average Mainer, but it may also bolster his support in some of Maine's more affluent communities in southern and coastal parts of the state.

But it allows LePage and Michaud to play up their "humble roots," Melcher said.

"Still, I can't see either of his opponents making the issue an explicit one," Melcher said. "It's kind of old news at this point, so the effect of these numbers coming out now is pretty limited."

sthistle@sunjournal.com

Photo illustration Scott Thistle/Sun Journal

From top to bottom, this graphic shows the 2013 earnings of independent Eliot Cutler, Democratic U.S. Rep. Mike Michaud and Republican Gov. Paul LePage, all candidates for Maine governor.

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Comments

JANE RYERSON's picture

income and tax levels on governor and candidates

The statement made by Ben Grant chair of MDP regarding LePage's stance on tax cuts or of abolishing the estate tax does not necessarily benefit rich people always. see statement made in article.

Ben Grant, chairman of the Maine Democratic Party, said Cutler and LePage's stance on the estate tax shows they are disconnected from the average Mainer.
"Two of the candidates want to create one set of rules for the wealthy and another set of rules for everyone else," Grant said. "Mike Michaud is the only candidate who's looking out for the best interests of working Mainers and growing Maine's middle class."

I had a relative (born in 1919) who passed away in 2011 and left just over $1,000,000 in her estate. (unbeknownst to us) Because this was over the million mark we had to pay the state an estate tax of $80,000., (federal was nothing) prior to dividing this up between 9 beneficiaries. So I don't consider myself a rich person nor my relative but, this relative just saved and worked all there life until retiring from a clerical office position.

So for Mr. Grant to say the governor is disconnected is not true. Abolishing the estate tax will help everyone who has a relative who passes away. Many times a relative doesn't realize the value of the estate or if they are a beneficiary of one until contacted by the executor. Thus was the case.

I believe now, the estate tax has been raised to $2,000,000. So when you divide an estate up between several people the above does not go very far.

FRANK EARLEY's picture

Well that answers one question I've had..............

I often thought LePage was to easily swayed to make decisions that inevitably cause property taxes to go up. Not having to pay property taxes, makes making others pay higher taxes that much easier...................

RIL'RIIA KIL'URDEN's picture

Pandering to the rich....

. . . I have to dispute what political analysts are saying because I know too many activists who will be as disturbed by Mr. Cutler's statement of

“There are three factors that drive people my age away from Maine," Cutler said at the time. "One is the estate tax. That matters to wealthy people; it doesn't matter to others. But when we drive the wealthy out of Maine, we're driving away a lot of investment in this state.”

In a state like Maine, where it tries very desperately to cleave to some fanciful facade of being "the way life should be" while trying to mow the poor and lower middle classes underfoot (if not exploit them outright), that is a very 'business as usual' attitude --- which Gov. LePage has already taken criticism for with his last round of tax breaks that went to benefit the rich, or with Sen. Angus King Jr.'s voting habits that favor the corporation at the expense of the middle class and poor (even putting Mainers' necks on the chopping block specifically while handing out billions to big agra in the Farm Bill).

It would be one thing if Maine had any kind of employment sector that could act as a buffer, but the deepening divide of highly specialized jobs that require immense student loan debt or the poverty-creating part time minimum wages jobs that are left over as the average means of employment cannot possibly fill the gap.

That means such elitist thinking is both wholly unrealistic and irresponsible--in addition to not being sustainable, as we've seen in cities like Lewiston where the Mayor and some Council members seek to blame the poor for the collapse of the economy. (When was the last time anyone remembers a working class poor person outsourcing their own job overseas?)

The more I hear from Culter and his campaign, the more I come to realize that he is yet another politician who pushes his own ideologies and agenda regardless of the demographics of his constituents or their values.

After people like LePage and King, I cannot see how Maine can possibly afford anymore of that.

CAROLYN LIBBEY's picture

Well, thank you, Sun Journal.

Well, thank you, Sun Journal. This article certainly opened my eyes about our esteemed candidates.

RIL'RIIA KIL'URDEN's picture

Agreed

I'm also waiting for a published list of campaign contributes. So far Michaud's the only one who has disclosed his campaign amounts and donation sources.

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